A Redfin survey earlier this month reported that renter households in the United States grew three times faster than homeowner households in the last year.
Renter households grew by 2.7% in the third quarter of 2024, making up 45.6 million homes, compared to the 0.7% growth in homeowner households (86.9 million). This year, renter households have seen their fastest growth rate since 2015.
“Affordable housing has been at the forefront of this election cycle because so many people are struggling to see how they will ever become homeowners — especially those from younger generations,” Redfin senior economist Sheharyar Bokhari said in the report. “With home prices at record highs and mortgage rates remaining elevated, renting is increasingly the only viable choice for many young people and families.”
Although renting is often seen as the more affordable choice, many Americans are still struggling with making payments each month. A separate Redfin survey found that more than 1 in 5 renters give their entire paycheck to rent costs.
Top five ways survey respondents are affording rent:
- All paychecks go to rent — 22%.
- Work a second job — 20%.
- Work a job I hate — 19%.
- Receive government aid — 18%.
- Cash gift from relatives — 14%.
Housing predictions for 2025
With home prices being out of reach for many Americans, especially for young Americans looking to enter the market and purchase their first home, there’s hope that 2025 will be affordable. Zillow’s housing predictions for next year anticipate a little more financial breathing room due to new builds.
“Zillow forecasts 2.6% home value growth in 2025, a relatively slow pace that is similar to this year’s growth. For existing home sales, Zillow forecasts 4.3 million in the coming year, up slightly from 4.1 million in 2023 and a projected 4 million in 2024,” according to their report.
Like this year, mortgage rates are expected to have a roller coaster effect of falling and rising throughout 2025. Rates have been steadily increasing since the year-low in September. According to Freddie Mac, the average 30-year fixed rate mortgage this week is 6.81%.
Market trends also expect smaller developments to increase in popularity next year as builders recognize the demand for more affordable living.
“There’s a growing number of people looking to be first-time homebuyers, which is driving demand for budget-friendly options. Smaller-sized homes are oftentimes a better fit for these buyers because they may have a smaller budget, are looking for less space and are just tired of renting,” Katherine Cohen, global associate creative director for rug design firm FLOR, told U.S. News and World Report.
According to Zillow, the word “cozy” is showing up in more listing descriptions — 35% more in 2024 than in 2023 and reflecting a shift in design trends away from expansive open floor plans.